U.S. home prices increased 1% in March compared with February and were up about 3.7% compared with March 2018, according to CoreLogic’s home price index report.
However, the report shows that home price appreciation continued to decelerate.
What’s more, CoreLogic predicts that home price appreciation will continue to slow in the months to come: Currently, the firm is forecasting that home prices nationwide will decrease by 0.3% from March to April.
But the firm is also forecasting that home price appreciation will pick up steam again later this year. As a result, it is forecasting that home prices will increase 4.8% through March 2020.
“The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” says Ralph McLaughlin, deputy chief economist at CoreLogic, in a statement. “But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds.”
As of the end of March, about 35% of the top 100 metros had a housing market that was, in total, considered “overvalued,” according to the firm’s Market Condition Indicators (MCI).
About 26% of metropolitan areas were “undervalued” and 39% were “at value.”
During the first quarter of 2019, CoreLogic together with RTi Research of Norwalk, Conn., conducted an extensive survey measuring consumer-housing sentiment in high-priced markets.
The survey respondents indicated high home prices have an impact on high rental prices as well. Nearly 76% of renters and buyers in high-priced markets agreed housing prices in these markets appeared to be driving rental rates up.
“The cost of either buying or renting in expensive markets puts a significant strain on most consumers,” says Frank Martell, president and CEO of CoreLogic. “Nearly half of survey respondents – 44 percent of renters – cited the cost to rent in high-priced housing markets as the number one barrier to entry into homeownership.
“This is potentially forcing renters to wait longer to have the necessary down payment in these communities,” Martell adds.